Two firms dominate the cinema industry in South Africa: SterKinekor and Nu Metro. Although these firms essentially offer a homogeneous product, each firm attempts to differentiate itself in the eyes of customers.

Marks will be awarded for your ability to integrate theory with the scenario provided.

Q.4.1

Identify the type of market/industry structure that is applicable to the cinema industry in South Africa. Justify your answer by referring to the main characteristics of this market structure.

(4)

Q.4.2

Explain the concept of nonprice competition in the context of the cinema industry using examples to illustrate your answer.

(6)

Q.4.3

Government may prevent possible abuse of market power by these firms within the industry. How would the government achieve this?

(5)

Question 5(Marks: 20)

Q.5.1

Identify any five examples of industries operating under conditions of monopolistic competition and outline any of their salient features to justify your selection.

You will receive more marks for your own original examples than for examples in your textbook, from your lecturer, or onLearn.

(10)

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Q.5.2

Explain, with the aid of a graph, the short run equilibrium position of a firm operating in the monopolistic competitive market structure".

Marks will be awarded for your ability to integrate theory with the scenario provided.

(10)

Question 6(Marks: 15)

You have been appointed as an economic advisor to the principle of Bright Sparks College, a firm operating in the market for tertiary education. Over the past 18 months the following simultaneous changes have been noticed in the market for tertiary education:

• A decrease in consumer income;
• An increase in the cost of providing tertiary education services.
• Explain, with the aid of a graph, the impact of the above changes on the equilibrium price and equilibrium quantity in the tertiary education market.
• (Note:Seven marks for a graph and 8 marks for the explanation.)
• Marks will be awarded for your ability to integrate theory with the scenario provided.

Question 7(Marks: 20)

Q.7.1

The graph below depicts the labour market for truck drivers. This is a perfectly competitive labour market. Use the graph to answerQuestions 7.1.1 - 7.1.3.

W

300 250

S E2

0

E1

80100 125

D1

D2

N

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2020

Q.7.1.1

Assume the market demand curve is D1, the market supply curve is S and equilibrium is at E. Now the market wage rate paid to truck drivers increases from R250 to R300. Identify thetypeof disequilibrium that will result from such a wage increase.

(2)

Q.7.1.2

Determine thesizeof the disequilibrium that will result from an increase in the wage rate from R250 to R300.

(2)

Q.7.1.3

Assume market equilibrium is at E1 at the intersection of D1 and S. Now the demand curve shifts from D1 to D2 on the graph. Identify any three factors that could result in this increase in the demand for truck drivers.

(6)

Q.7.2

Use a graph to illustrate and explain theindividual supply of labourcurve. In your answer, describe the forces that determine the form (shape) of the individual supply of labour curve.